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RICHARD QUEST, HOST: No tapering today. The Fed holds still and the stock market surges to a record high. It's Wednesday, September the 18th.

So, tonight, no tinkering with tapering. The Fed wants to see more signs of progress before it makes any reform.

Also tonight, the Starbucks CEO tells us no guns, please. And no arms debate either.

(BEGIN VIDEO CLIP)

HOWARD SCHULTZ, CEO, STARBUCKS: We have been mischaracterized as either being pro or anti-gun. We're neither.

(END VIDEO CLIP)

QUEST: And wheels up. The chief exec of Volaris rang the opening bell, and he will be with me in the C Suite on tonight's program.

Because I'm Richard Quest. I mean business.

Good evening. An extraordinary decision today from the US Federal Reserve. The central bank will continue its bond-buying program, and it's a case of full speed ahead. Last night, we told you it was all about this word: tapering. Well, today, it means something completely different. No tapering.

Most expected the Fed would decide to do it today. Instead, however, the Fed said it will continue buying bonds at the rate of $85 billion a month. And as you can see on our speedometer, this is the equivalent of the Fed keeping its foot firmly on the pedal.

Now, we thought that they might take off the gas just a little bit, but not a bit of it. Today, the Fed said it was going to stay tapering -- it was going to stay buying bonds at $85 billion a month.

Now, everyone knows tapering is on the way, so why wait? Well, let's read what the Fed actually said about it. The statement said, "The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases." The chairman of the committee -- that's the chairman of the Fed, Ben Bernanke.

(BEGIN VIDEO CLIP)

BEN BERNANKE, CHAIRMAN, US FEDERAL RESERVE: This was a step -- it was a step -- a precautionary step, if you will. It was a -- an intention -- the intention is to wait a bit longer and to try to get confirming evidence to whether or not the economy is, in fact, conforming to this general outlook that we have.

(END VIDEO CLIP)

QUEST: A precautionary step designed to see the intention of the economy. It may have been precautionary, but look at the results on the market. The Dow Jones, which had been pricing in a $10 billion tapering was down just about 30 or 40 points for most of the day.

And then at 2:00, bingo, bish-bash-bosh, as soon as you see it, rarely will you see such a change as that. It goes from there all the way up, and it stayed higher for the entire session, the rest of the session, not quite at its all-time -- at its height. The S&P was the same, all-time highs left, right, and center from the market.

Randall Kroszner is the former Fed Reserve governor. He joins me from the Chicago Booth School of Business. All right. We can get to the whys and the wherefores in a second. But you expected them to taper today, did you?

RANDALL KROSZNER, FORMER FEDERAL RESERVE GOVERNOR: I thought it was more likely that they were going to take a step down than not, but given that the economic data more recently has been a little bit weak and there's a lot of fiscal uncertainty out there, it shouldn't be too much of a surprise that it was going to be a close call, and they chose not to.

QUEST: What's the close call involved in this? Because unemployment is coming down, job creation is not as fast as perhaps they would like, but -- so unemployment is coming down. The last GDP number, 2.5 percent on an annualized basis. Home purchases are up. There is prices going up. So, what are they seeing that they're waiting for even before the symbolic act?

KROSZNER: Well, the unemployment rate went down last month, but for the wrong reasons. It's because fewer people were looking for work.

And so, if you look at he so-called household survey where they get the unemployment rate from, there are actually fewer people working, but even fewer people who are looking for work. And so, that meant that the unemployment rate came down, but for the wrong reasons.

The number of jobs that have been -- being created over the last three to six months have been lower than over the previous three to six months. Their forecasts going forward were a step down from where they were just a few months ago.

QUEST: Right.

KROSZNER: And so, that's made them a bit more cautious.

QUEST: Except -- with the last quarter, I realize GDP is a rearview number, it tells you what has happened. But if you -- let's just take the GDP number and factor it against the enormous stimulus of $85 billion. We were only talking here about a symbolic act. They're going to have to make this symbolic act at some point.

KROSZNER: Yes, I hope sometime in our lifetimes --

(LAUGHTER)

KROSZNER: -- that that will happen. I'm not sure of that, but I think that's likely. I think one of the big concerns they had -- and the chairman made a couple of references to this, and the statement also referred to this -- is there's been a very large backup in the -- in interest rates, particularly the ten-year rate, and so many US mortgages are related to that ten-year rate.

I think they were concerned that they got much more of a reaction to their talking about the potential for the step-down than they had expected --

(CROSSTALK)

QUEST: But he's -- he's going to --

KROSZNER: -- they wanted to wait a little on that.

QUEST: -- he's got no one to blame but himself. At his last press conference, he's the one who put September into the frame.

KROSZNER: Well, he said it was a possibility. So, these are -- this so-called forward guidance, or what I call open-mouth operations, because it's about the purchases and sales of securities down the line, the open- market purchases or sales. These open-mouth operations are sort of hard to calibrate, both by the markets and by the Fed.

I think the markets reacted much too strongly when the Fed chairman just broached the subject, and now I think he wanted to make it clear, they overreacted, we're not going to act now because we are still concerned about recovery in housing markets and elsewhere, and we're going to wait and -- in some sense, it's a warning to the markets: if you overreact again, we're going to continue to wait.

QUEST: But -- we're dancing on the head of a pin here to some extent, because we know tapering is coming. This is -- this promiscuous accommodation of liquidity --

KROSZNER: Promiscuous.

QUEST: Well, it can't continue forever, so they're going to have to start --

KROSZNER: For sure, but that doesn't make it promiscuous.

QUEST: They're going to have to start pulling back at some point. When they do, it'll -- some people are now saying December. Do you think it'll be this year?

KROSZNER: It -- the chairman made it really clear it's going to depend on the data, and so it's going to depend on both how the data are evolving, because it seems like at least the labor market is cooling a little bit from where it was. If we continue to get that kind of cooling or swoon, that's going to delay it.

So, it's -- it's hard to predict, because it's going to depend on the specifics of the data. Also, it's going to depend on where interest rates are.

QUEST: Right.

KROSZNER: If we see the interest rates stay down and the mortgage market come back up, that will give them a bit more comfort to take that step in December.

QUEST: Randall, good to talk to you. I'll leave my promiscuous in the studio on this occasion. Thank you for --

KROSZNER: Excellent.

(LAUGHTER)

QUEST: Good to see you. Thank you for joining us on the program tonight. Now, there is one place where they simply adored what the Fed did today. And Alison Kosik is right at the heart of it for us tonight. The Stock Exchange.

Alison, I cannot recall a time where you've seen that split-second reversal of a market as you saw. We're going to -- let's show the graphic in, because it is -- of the Dow Jones -- because it is the most extraordinary moment of what the market thought.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And it wasn't just the Dow, Richard. This was really a stunning reversal, obviously for the Dow, which was in the red, but you see how much the S&P 500 ended higher, 20 points higher, more than 1 percent higher on this news.

I mean, really, what a stunning rally today. This after the Fed saying, you know what? They're going to keep the punch bowl out for investors to partake, and they celebrated today. Euphoria really was the word of the day today, Richard.

QUEST: We'll talk more about it later in the program. Alison Kosik at the New York Stock Exchange. We thank you for that.

Coming up next, a deal which has the potential to add $420 billion -- billion with a B -- to the global economy, and the man negotiating for the Americans on the US-EU trade joins me next. This is QUEST MEANS BUSINESS.

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(COMMERCIAL BREAK)

QUEST: Now today, President Obama touted America's growing energy sector as a bright spot in the economy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We are producing more energy than we ever have before, and -- although in a world energy market, for us to say that we're entirely energy independent is a little bit of a misnomer.

What's absolutely true is that the geopolitics of energy have shifted, and that's strengthened our manufacturing base here. It made it a much more attractive place for us to invest.

(END VIDEO CLIP)

QUEST: Now, as we've been saying all week, oil and gas production is key to the resurgence of growth and to the US economy. The US economy has become more productive, it has now got a much stronger hand when it's negotiating its trade deals with the rest of the world. More exports, better terms of trade.

Let's talk to the US trade representative, Ambassador Michael Froman. Ambassador, good to talk to you, sir, joining us from the White House. Thank you for making time.

MICHAEL FROMAN, US TRADE REPRESENTATIVE: Good to be here, Richard.

QUEST: Ambassador, you are now negotiating dozens of various different agreements with many different countries, but you're doing so from a much greater position of strength than in the past, aren't you?

FROMAN: Well, Richard, as the president has made clear, our job here is to promote growth, create jobs in the US, and promoting exports is a key part of that. So, opening markets through the trans-Pacific partnership negotiations and the trans-Atlantic trade and investment partnership are a key part of our overall economic strategy.

QUEST: Let's talk just briefly, because I know you've got many deals, and we can talk about some of them. But the EU-US one, which would add hundreds of billions of dollars, when do you believe a deal can be reached?

FROMAN: Well, we've just had one round of negotiations, so we're still at the early stages. And we'll be working hard over the coming months or year or year and a half, however long it takes to get to a good deal.

We've got a lot in common with the EU, we both are well-regulated markets, advanced industrialized markets with high labor standards, among other things. But we have our differences as well, and we're going to work through those differences in the negotiations.

QUEST: All right, 18 months, two years? You must have a private deadline.

FROMAN: You know, I think we're going to let the substance dictate the deadline, and we're going to work as hard as we can to get it done, but not set an artificial deadline.

QUEST: Are you worried about the French?

FROMAN: Well, I think -- look, every country in every negotiation has sensitivities, and that's the goal of the negotiation is to deal with those sensitivities and find ways to come up with a comprehensive deal that is a win-win for all parties.

QUEST: Ambassador, I want you to listen to what the new head of the WTO said on this program just last week.

(BEGIN VIDEO CLIP)

ROBERTO AZEVEDO, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: It's not about getting the perfect package. It's not about getting the perfect outcome of a multilateral round, but get what we can get.

(END VIDEO CLIP)

QUEST: He was talking there about the Doha round. Come on, Ambassador, it's time to put the Doha round into euthanasia and get what you can on a more modest round, isn't it?

FROMAN: Well, under President Obama's leadership, we've developed a global consensus that the time had come to pursue fresh, credible approaches to multilateral trade liberalization. And right now in Geneva - - and we welcome Roberto Azevedo's role in Geneva, there's a lot of focus on trade facilitation, on trading services, on information technology --

QUEST: Right.

FROMAN: -- expansion, and if we can make progress in those agreements and reach a small package of agreements around those issues, it can create further momentum going forward.

QUEST: But a big Doha round, that ain't going to happen, and the sooner everybody says so the better, would you believe?

FROMAN: Well, our focus right now, there's a big meeting in December of the WTO ministers, our focus is on seeing whether we can reach agreement on a good binding trade facilitation agreement, on some elements of agriculture, and on a package of measures for at least developed countries. It's doable, but it's going to require a lot of hard work between now and then to get there.

QUEST: Ambassador, finally, the president talked about doubling the number of exports. He made it a key priority, and people said it couldn't be done. Now, manufacturing resurgence has certainly improved hugely. You, sir, are a key part, now, of this recovery as you negotiate your deals. Which is your most important deal that you want to negotiate?

FROMAN: Well, our most urgent deal right now is the trans-Pacific partnership, because we've set the goal of concluding that agreement by the end of this year, and there'll be an important meeting in Bali next month, where President Obama and the other TPP leaders will meet to review the progress and chart out the course towards a conclusion.

The trans-Atlantic agreement is the next one in line, and that's beginning to ramp up. And then we have these agreements that are being negotiated in Geneva. So, they're all important in their own way, but the most urgent one right now, I'd say, is the trans-Pacific partnership.

QUEST: And to the -- to Dominique Strauss-Kahn, who told me at an interview that by having the trans-Pacific and the trans-Atlantic, the United States actually wanted to dominate the trade agenda. What would you say?

FROMAN: Well, our goal is not to dominate the trade agenda. It is to work with like-minded countries to raise standards, adopt new disciplines for new challenges in the global trading system, and to expand the group of like-minded countries as much as possible so that we can feed these new disciplines and higher standards into the multilateral trading system as well.

QUEST: Ambassador, please, do come back onto this program and talk about these important issues --

QUEST: The US trade representative joining me from the White House on the issue of trade.

Now, the US, of course, will be counting on plenty of oil and gas exports in the coming years. The export part might be good, but the imports will not please T. Boone Pickens, a titan of the energy industry, who thinks the US oil should revolutionize the domestic supply if it's kept at home. Where else to meet T. Boone Pickens except in Texas on my road trip.

(BEGIN VIDEOTAPE)

QUEST: Now this one -- you've got to stand next to it.

QUEST (voice-over): The portrait is appropriate for this larger-than- life figure in the oil and gas industry. T. Boone Pickens, who at the age of 85, can still size up the markets with a mere glance.

T. BOONE PICKENS, FOUNDER, BP CAPITAL: It doesn't take me long to see whether I'm up or down.

QUEST: He has seen many profitable days in a career that's lasted more than half a century. But even he never predicted the energy boom made possible by hydraulic fracturing, better known as fracking.

PICKENS: I'm surprised. I never envisioned that you could recover the gas and oil that we've been able to recover out of rock.

QUEST (on camera): How much of the US economic advance do you think can be now credited to the oil and gas industry?

PICKENS: We have the cheapest oil by 10 to 20 percent, we have the cheapest natural gas by 75 percent, and we have the cheapest gasoline by 50 percent.

What does it do for you? You can imagine what it does for your economy. We're building plants back in the United States now. They're coming back in here building plants in plastic. We've got huge fertilizer business, all from natural gas. Cheap natural gas is causing that to happen.

QUEST: The wall of fame, some might say.

PICKENS: Well, it's -- there's some good ones up there.

QUEST (voice-over): In the 1980s, T. Boone Pickens made headlines as a corporate raider. Today, they're called "shareholder activists."

QUEST (on camera): These are your companies, or some of them.

PICKENS: Yes.

QUEST (voice-over): He now runs the Dallas-based hedge fund BP Capital. He's the author of the Pickens Plan. It's goal is energy independence for North America.

PICKENS: You have a North American energy alliance. You bring together Canada, Mexico, United States. We're the market for their oil. That's the case today. Our biggest supply of oil outside of the United States is Canada.

Put them together, we're their market, and it's -- we're energy independent with North America. We don't need anything from anyplace else. We control our destiny. It's not left up to somebody in the Mid East who actually, I consider them to be the enemy in most cases. They hate us. And there's no reason to be tied to them in any way.

QUEST: The answer is in your own back yard.

PICKENS: Oh, yes.

QUEST: In your own production. Is that what you're saying?

PICKENS: Exactly. What I want this president to stand up and say, we have the best oil and gas industry in the world. We are years ahead of the rest of the world on horizontal drilling, fracking, our techniques in all. We should take credit for what we've accomplished, and we've accomplished a great deal, and we're pulling the country back on its feet from a bad economy.

QUEST: Ah, these are the cartoons.

QUEST (voice-over): Even though Pickens has been lampooned in the press over the years --

PICKENS: This is signed by Ronald Reagan.

QUEST: -- he has always been taken seriously by those in the seats of power.

QUEST (on camera): This is what we always think of, isn't it?

PICKENS: Yes.

QUEST (voice-over): After all, for a man who has made such a fortune out of oil and gas, he knows the value of what comes out of the ground.

(END VIDEOTAPE)

QUEST: Now, when we come back in a moment, Mexico's budget airline Volaris has stormed onto the stock exchanges of New York and Mexico City. The chief executive, Enrique Beltranena, is with me and will be joining me in the C Suite after the break.

(COMMERCIAL BREAK)

QUEST: Shares in the Mexican budget airline Volaris closed more than 8 percent higher in New York on the day of its stock market debut.

(BEGIN VIDEO CLIP)

(NEW YORK STOCK EXCHANGE OPENING BELL)

(CROWD CHEERS)

(END VIDEO CLIP)

QUEST: The chief executive rang the opening bell on Wall Street this morning -- excuse me -- as the company launched dual listings in New York and Mexico. It raised close to $350 million with its IPO and been operating for -- excuse me -- seven years, in that time has flown more than 32 million customers.

Now, to the C Suite, where the chief executive joins me to talk about it. Congratulations, sir, on your IPO. It's always good to --

ENRIQUE BELTRANENA, CEO, VOLARIS: Thank you very much.

QUEST: -- have a successful 8 percent gain. You are running an airline in one of the most competitive markets. There are two or three other low-cost carriers in Mexico.

BELTRANENA: Right. There is -- I know there are a couple of carriers that have a low cost, low fare. They are not ultra-low cost carriers, which is the main difference.

QUEST: You're ultra-low cost?

BELTRANENA: We're an ultra-low cost carrier, and we do strive to have the lowest cost, the lowest-unit cost in the Americas.

QUEST: Everybody strives to have the lowest cost.

BELTRANENA: I know it, but we do have it.

QUEST: So, you're Michael O'Leary of Mexico?

BELTRANENA: I think we are even lower cost than Michael O'Leary.

QUEST: So, that means you're going to be looking at just about -- you're looking at every possible way of cutting the cost and raising the revenue.

BELTRANENA: Absolutely. It's not just about reducing the cost, it's how you configure your assets, it's how you fly your assets, and how it's you variablize your costs.

QUEST: If that's the case, and you all fly the machines, effectively -- your 320s, 321s, -- you'll have a root structure that is primarily Mexico and the United States.

BELTRANENA: Right.

QUEST: Where are you going to grow?

BELTRANENA: We will grow in a point-to-point combination of routes within Mexico and into the US, also point-to-point to the towns where friends and relatives fly, and that there's no service in Mexico today. Because everything has to be passing through the Mexico City airport.

BELTRANENA: Exactly. That's the way it is today. We do it point-to- point from the cities in the northern part of the border area --

QUEST: To Mexico City?

BELTRANENA: To the cities direct, not passing through Mexico City.

QUEST: Right. So, if that's the case, you've got some pretty long legs, haven't you? Chicago, down -- you do Guadalajara, across to Tijuana -- so you've got some pretty long legs that you have to run --

BELTRANENA: Exactly.

QUEST: -- where your cost-efficiencies go right out the window.

BELTRANENA: They do in some way, and not in the way -- the reason they do not go away is because you spend less fuel in a longer station.

QUEST: And what will you be doing in terms of ancillary revenues? Are you charging for bags in the overhead compartment?

BELTRANENA: We are absolutely there. Our ancillary revenues have been growing in 35 percent on a per year basis. We are already at $17 per passenger. We reduce the fares, reduce the fares, reduce the fares. We are the cheapest fare in the market. And then we construct on top of that the ancillaries.

QUEST: Right. But are you going to -- for example, do you think you should charge for people to put bags in the overhead compartment, like Wizz Air does in Europe?

BELTRANENA: Oh, absolutely. We strongly think that we need to do whatever it takes because if we can keep on reducing the fare and making the fare the lowest fare that we can make, and then have the client to pick the services that they want to have.

QUEST: I need to turn to one other area, of course. Mexico at the moment has got some extraordinary floods at the moment, absolutely appalling situation.

BELTRANENA: Yes.

QUEST: People are trapped, there's been terrible loss of life. Your, obviously, airline has been affected, but you're obviously involved in helping the people as well.

BELTRANENA: Absolutely we are. We today have 15 emergency flights supporting the tragedy in Acapulco.

QUEST: And this is something you will obviously be concerned about in the future.

BELTRANENA: Oh, absolutely. We do have a great social responsibility area, which is always striving to help and support our communities, because we feel very much part of the community.

QUEST: Sir, we will come down and we will try your airline, and we will --

BELTRANENA: I hope so.

QUEST: And we'll not make the promise that I once said to one airline CEO, come back in five years if you're still in business, because you're still in business.

BELTRANENA: I -- with the costs we have and --

(CROSSTALK)

QUEST: Oh! These costs!

BELTRANENA: -- bigger and --

QUEST: You love these costs!

(LAUGHTER)

BELTRANENA: I do. Thank you very much, Richard.

QUEST: Good to see you. When we come back after the break, corporate America is caught in the middle of America's gun battle. Starbucks' chief exec has a new message: keep your guns out of our coffee shops. It's an exclusive TV interview with Howard Schultz when we return.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.

The US Federal Reserve is sticking with its stimulus plan. The central bank announced it will continue pumping $85 billion a month into the bond market because of concerns for the state of the US recovery. The surprise decision sent stocks soaring. The Dow and S&P 500 closed at record highs.

Russia has labeled a UN report on chemical weapons use in Syria "one- sided and distorted." The country's deputy foreign minister sat down with the Syria president Bashar al-Assad today. He says Syria handed over evidence from the attack that shows the rebels were responsible.

At least 6 people have been killed and 13 more injured after a passenger train slammed into a double-decker bus in Canada. Officials are investigating the cause of the crash.

And three storms are currently threatening Mexico, including a possibly cyclone, a tropical depression, and remnants of a hurricane. At least 57 people have died from the chaos they've caused in the worst-hit area of Acapulco, 40,000 tourists were stranded earlier this week.

The Iranian human rights activist and the lawyer Nasrin Sotoudeh has been released from prison in Tehran. Ms. Sotoudeh was imprisoned in 2010 for, in their words, "acting against national security" when she defended Iranians who were detained following the 2009 elections.

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QUEST: As the Fed outlined its concerns with the state of the U.S. recovery, they've made measure and talked about the problems of the fiscal deficit and the arguments in Washington. Now the president again called for compromise on the budget. A deadline's coming up this month.

In a speech to 100 CEOs, Barack Obama urged Big Business to put pressure on congressional Republicans to pull back from the battle. And he warned he would not be held to ransom over the threat of a shutdown.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm happy to negotiate with them around the budget, just as I've done in the past. What I will not do is to create a habit, a pattern, whereby the full faith and credit of the United States ends up being a bargaining chip to set policy. It's irresponsible.

(END VIDEO CLIP)

QUEST: That's the president.

Well, the Fed, of course, decided that they were not going to begin tapering today. And we need to focus on the reasons why the Fed, because if you look at the economic situation, well, frankly it seems rather good and there have been thoughts that tapering would begin, starting with unemployment. Now the Fed has set 6.5 percent as the benchmark at which they will start raising rates. But unemployment has come down from over nearly 10 percent to 7.3 percent. And Fed tapering depends heavily on further labor market improvement.

Moving across to GDP, in the second quarter, it was 2.5 percent on an annualized basis. Recent upward revisions had raised the tapering expectations. And then there's this one. You've got inflation at 1.5 percent; it is below the benchmark and the long-running objective of the Fed, which is 2 percent. So on those measures, inflation, GDP, unemployment, a question for Julia Coronado at BNP Paribas, the evidence seems to have been there to at least have done symbolic tapering.

So why didn't they?

JULIA CORONADO, CHIEF ECONOMIST N.A., BNP PARIBAS: Well, it's all how you look at the data. You know, we see some declines in the unemployment rate in the last couple of months. But the job growth was weaker; the quality of job growth has been very poor, lots of part-time, low-wage jobs, and falling labor force participation.

So this is not the kind of data backdrop that the Fed wants to taper into. GDP growth in Q3 is tracking 1.5 percent. So I think that they were worried about tapering against the backdrop -- oh, and by the way, the housing market has cracked under the pressure of rising rates --

(CROSSTALK)

CORONADO: So you taper against that backdrop and with the fiscal fight ahead of you, could be very destabilizing.

QUEST: All right. So they don't taper now.

CORONADO: Right.

QUEST: (Inaudible) wonders if it's going to be December when -- so they pull themselves two or three more months. But we can't keep going through this. They're going to have to do it at some point.

CORONADO: They will have to do it at some point. But again, I think what the Fed did today was take back data dependency from financial markets. Financial markets had just been assuming the Fed was going to taper because they kind of signaled it. And that they would end in mid- 2014 because they had signaled it.

But they ignored the Fed when the Fed said we're data dependent. And in fact, the data have been weaker than the Fed's forecast. So the Fed said no markets; do not get too far ahead of us. We don't want mortgage rates at 5.5 percent. We want mortgage rates lower and so the Fed won the battle today.

QUEST: I'm just showing a chart here that shows exactly, Julia, the way the Dow Jones has risen since the beginning of the crisis. You have Q3 1 of $500 billion back in '08. You then have all -- if that one will move across -- there's be -- there's the graph; you have QE 2, which comes in in November 2010, which comes out. And then, of course, you have the QE 3. And throughout all of this, you have nonstop market increases.

And will that continue?

CORONADO: Well, actually, I think the stock market obviously the stock market's enjoying the news today. But of all the asset classes, it's probably the least distorted. So if you look at PE ratios, they're not that crazy. Profit growth has been really strong. So, yes, QE has definitely benefited the stock market. But it's been a much bigger support to the bond market. And it was the bond market recently that sold off hard interest rates rose violently. And it had a follow-through almost immediately to the housing market. So --

QUEST: But if the Fed is not going to have a repeat of that, and they are relying, to some extent, on forward guidance now, the forward guidance has to be in the most explicit terms; otherwise, you end up with the -- if you like -- confusion 'round the edges, and you end up with a bond market spike.

CORONADO: Well, I think this phase of monetary policy -- which let's call it the normalization phase -- is going to be inevitably volatile. The markets are going to try and get ahead of the Fed; the Fed's going to have to push back at time. And we are going to have these fits and starts. And you know, we just have to look at the data, trade off the data, listen to what the Fed says, take them at their word.

And you know what, we now kind of know who's going to be the next Fed chair. So I think the vice chair said, Ben Bernanke, you don't need to worry about this, getting this started under your watch. I can handle this from here.

QUEST: Many thanks indeed, Julia. Good to see you. Thank you for putting it into perspective.

Now the markets, of course, have been giving their reaction. A tall, grande, venti, whatever you want, take your pick. But when you please go to Starbucks, leave your guns at home. That's what the chief exec of Starbucks, Howard Schultz, is asking his customers to do. Gun owners had previously held a Starbucks Appreciation Day to honor the company's policies of letting customers carry weapons into certain states. That in turn led to counter protests. CNN's Poppy Harlow sat down with Schultz for an exclusive interview. Poppy joins me now.

Whenever we've -- we've all heard about this story. And it's taken on a gravitas because of the events in Washington, the -- out of proportion, maybe, to the story itself. So tell me, what is he saying?

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: He is jumping into the controversy, but not all the way, Richard. This is one of the best-known CEOs in the world, one of the best-known brands in the world, Starbucks. And Howard Schultz is requesting in an open letter to all Americans, please do not bring any guns into Starbucks. They are not welcome in our stores. But he's not going as far as to ban them. So we talked to him about why this move and why not ban them if he feels this way. Listen.

(BEGIN VIDEOTAPE)

HOWARD SCHULTZ, CEO, STARBUCKS: I think it's very important just to start the conversation by framing the fact that Starbucks is not a policymaker, and in fact we're not pro or anti-gun.

However, we do believe that guns should not be part of the Starbucks experience. As a result of that, making that decision, we are respectfully requesting that those customers who are carrying a gun just honor the request and not bring the gun into Starbucks.

We're also saying something else. This is not a ban. And the reason it's not a ban is that we don't want to put our own people in a position of having to confront somebody who is carrying a weapon. Those customers who will bring in the gun, we hope they won't, we're still going to serve them, we're not going to ask them to leave.

But this is a result of a number of things that have happened over the last few months that have put us in a position where I think we've been mischaracterized and misrepresented. And we also feel strongly that in talking to many, many customers, they're -- they come into Starbucks for a respite, for a sense of community, literally the third place between home and work. And I think they are -- they're somewhat jarred by the fact that guns have entered the Starbucks establishment. And I think there's a tremendous amount of confusion and ambiguity about the whole issue of open carry. And hopefully this will clarify our position and the fact that we think this position is made through the lens of civility and respect and hopefully most people will honor it.

HARLOW: I wonder about those people that really believe that they're uncomfortable in your store without a gun, that carry a weapon to protect themselves, to protect others and feel that you requesting that they don't bring a gun in puts them in an uncomfortable position.

What is your response to them?

SCHULTZ: I realize that when you make a decision like this in such a polarizing debate, you're not going to satisfy everyone. We think this is the right decision, the right position for our company and our customers.

And again, if people feel strongly one way or the other, that is the role of policymakers and the voters. And Starbucks is not a policymaker.

HARLOW: Some people are going to say you're going way too far; you're crossing the line. Other people are going to say you're not going far enough. I mean, this issue, you just can't win on. Do you think that it's going to impact Starbucks' business, your bottom line, and frankly do you care?

SCHULTZ: Yes, certainly I care if it impacts Starbucks' bottom line. But I think there are a number of decisions that we've made over a 40-year history that are based on our values, our guiding principles and the culture of our company. Not everything is a zero-sum game and not everything is about the bottom line. And I think when you are on the right side of your values and you believe strongly that the decisions you're making will make your people proud and will satisfy the majority of your customers, that in the long run, things are going to be good.

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HARLOW: Now let's think about this big picture. This is a company that has come out in front of so many controversial issues, vocally supporting gay marriage over the past few years; they banned smoking in front of their stores. Howard Schultz told Americans last year not to donate -- asked them not to donate to political campaigns until Washington really got its act together.

QUEST: But why?

HARLOW: But he's straddling the line here. He's not banning guns.

QUEST: Yes, but why is he doing it?

HARLOW: He believes in these things. And he believes that business leaders should be out front on these issues.

QUEST: So he's got a whole group of gun owners who are having meetings in his stores and they're brandishing their weapons?

HARLOW: You know, it really depends which one you look at. I mean, people, they carry weapons, yes, have come into Starbucks and brought their weapons because it is their Second Amendment right.

(CROSSTALK)

QUEST: He's not going to be able to win with this one.

HARLOW: Yes, and he knows that. He acknowledges that. And he acknowledges that in this letter that's going out in basically all the big newspapers in America tomorrow morning. But he says, we were thrust unwillingly into this debate because of what's going on on both sides. He called the discourse between both sides at and around his stores uncivil. And he believes that they need an answer.

I asked him if people don't respect a request and still bring guns into your stores, are you going to just ban them?

QUEST: (Inaudible) serve them?

HARLOW: Are you going to ban -- they're going to serve them -- are you going to ban them? And he said at this point this is --

QUEST: So it's not a principled -- it's not a principled position.

HARLOW: What do you mean by that?

QUEST: Well, he's not going to ban them. But at the same time he's asking them not to do it.

HARLOW: Not -- not --

QUEST: So he's not taking sides.

HARLOW: Exactly. And he reiterated in the interview time and time again, we -- we, a company, are not pro-gun; we are not anti-gun. This is our message: we don't think guns have a place in Starbucks and, Richard, I will tell you, I asked him, are you a gun owner? Does your personal view play into this? And he said that is not the issue. This is about the company.

QUEST: Poppy Harlow, thank you.

When we come back after the break, it may seem an unlikely collaboration: the pioneer of the boutique hotel, Ian Schrager, and the master of mass accommodation, Marriott. We'll show you what they've created after the break as we go business traveling -- QUEST MEANS BUSINESS.

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QUEST: Marriott and the man behind Studio 54 have teamed up to open a new hotel in London's Fitzrovia (ph). The London Edition is one of 100 that they plan to roll out worldwide. Ian Schrager, of course, is the creative force behind Edition and he is responsible for some of the world's most stylish hotels in another era. I asked him what he wanted to achieve with Edition.

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IAN SCHRAGER, HOTELIER: There wasn't any detail that wasn't a matter of life or death to us. There wasn't (inaudible). I didn't somehow fit in to the story that we wanted to say. And when you mesh all of those details, an alchemy happens. You can't write it in a book. It's like a spark, something happens. You go to a place you can't possibly imagine. And no one gets there (ph) if you put everything into it and get all the details.

QUEST: Were you an absolute pain during the process?

SCHRAGER: To the people working on the project? Hopefully that's an understatement. But a charming one.

QUEST: Demanding?

SCHRAGER: Very.

QUEST: Did you check everything? Did you want to make sure that it was all just as you'd wanted?

SCHRAGER: Yes, because you know why? You never know what detail is the detail that pushes something over the top. Never -- you never know which detail is the detail for pushing something over the top. (Inaudible).

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QUEST: Now that's Ian Schrager, talking to me in the restaurant of the Edition in London last week.

Now Arne Sorenson is the chief exec of Marriott International. He's the man who very much was the brains behind the idea. When he took over Marriott, he wanted to make a sound and he wanted to make a difference in the change. And the Edition was part of that policy.

So I asked him where Edition and the new hotel in London fits into the portfolio.

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ARNE SORENSON, CEO, MARRIOTT INTERNATIONAL: It will be a luxury brand in most markets. It'll be priced at or near the Ritz-Carlton. And of course there's no Ritz-Carlton in London, so we don't have that close comparison. There is one in Miami; there are two in New York. Be very interesting to see, I suspect in New York we've got one Ritz-Carlton at Central Park South, one in Battery Park. The Edition will be in the Clock Tower Building and I suspect it'll be priced in between the two of them, in part because of location and points of location and pricing.

QUEST: Who's going to stay in these hotels? Middle-aged men like me? Or young hip people?

SORENSON: You're very welcome, Richard. We'd love to have you here.

QUEST: You'll take my money in any event?

Who's going to stay? Who are you talking to?

SORENSON: You know, one of the interesting things about these hotels is our marriage with Ian started with his opening of the Gramercy Park Hotel in New York. And we went thinking all we'd see would be young people. He had the Rose Bar and the Jade Bar, different restaurant than is there today. Very happening place. And what we saw from the moment we walked in is all age groups.

The fact of the matter is it skews a little younger. But there are many of many different ages who want that lifestyle experience.

QUEST: Let's talk Millennials because Millennials -- it's very different when it's Gen X; you can't brand a generation, but we do it because there are certain truisms and stereotypes that (inaudible). And you have to attract the Millennials so they come into the system now, don't you?

SORENSON: We have been dominant with the Boomers, we think, for many decades. But increasingly the young, the X's and Y's, who are not about half of our customers, want even more. They want better food and beverage; they probably want more beverage. They want a little more lifestyle in the lobbies. They like to -- they like to hang in the lobbies as opposed to their rooms. These are some of the generalizations. So we're trying to make sure that we both have the brands that appeal and that with the older brands that we say, OK. We've juiced up that lobby so you can now come in; you can hang. You can have something to drink. You can be with other people, even if you're alone.

QUEST: How important is it now to have that portfolio? You want to keep people in your -- in the Marriott ecosystem. How important is that?

SORENSON: That's -- it's very important. Think about our Marriott Rewards program, which is the loyalty program that applies now to all of our brands, 45 million members, 2 million in China, 5 million in Asia. And those are growing overnight dramatically.

And customers we think like the experience; they like the service. But they like the recognition and benefits they also get from those rewards points. So they will apply in all of the projects over their life career; they may start at a Moxie (ph) or a Fairfield, which is relatively less expensive. They may take their honeymoons at a Ritz-Carlton or an Edition or a J.W. Marriott, or they may succeed tremendously and stay in those places all the time when they get a little (inaudible). We want to keep them.

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QUEST: That's Arne Sorenson, the chief exec of Marriott, talking to me at the Edition hotel in London.

A check on the world weather forecast when we return. QUEST MEANS BUSINESS.

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QUEST: It's been a busy day, extremely busy day, and not just for those of us in the financial world. The weather in Mexico and elsewhere has been very, very serious.

Jenny Harrison is at the World Weather Center for us tonight.

JENNY HARRISON, CNN METEOROLOGIST: Yes, Richard, not a good day (inaudible). In fact, the people of Mexico really bracing for what could potentially come next, because the last few hours, things have been looking a whole lot better. Let me show you the satellite first of all, because we've had some relatively good clear skies.

We've had the usual array of scattered thunderstorms and showers as well. But we're watching now this. This is actually Manuel, which has reemerged across these warm waters and once again is a tropical storm. But we're still really dealing with the aftermath of those two storms and the rains that it brought and the widespread flooding as well.

Let me just show it to you like this. This really shows you straightaway the sort of rains we've been dealing with. The green is the amount of rain that's come down throughout these two storms. The yellow is actually the average. So Acapulco of course, more rain coming from this storm than the monthly average. The same for Tuxpan as well, in Mexico, and exactly the same for Monterrey.

So you get the general idea straightaway. And look at the amount of extra for Monterrey, over 100 millimeters more than the monthly average. And this is what it is looking like for all of these people. It is just a dire situation. And we know that the numbers that are impacted, over a million people displaced, 40,000 tourists are stranded, not helped by the fact that the airport is flooded and there are dozens of fatalities, over 50 people have died so far.

Now there have been a break in the rain, as I say, but the threat of landslides is still very, very real. And there's more heavy rain because of Manuel, because it has now actually redeveloped into a tropical storm. And there's also a new storm that is now forming over the Yucatan Peninsula. Now there are 77 municipalities in four states that have now declared a state of disaster. There in the red. And in through Thursday, we're expecting more rain to all these areas showing up in yellow. So it really is a very serious situation indeed.

This is what we have to come in the next 48 hours. This is the next storm. It's pushing across into the Gulf of Mexico, it will certainly produce more in the way of rain. There's another disturbance sitting just to the south of Acapulco and then there is Manuel off towards the northwest. And so the landslide threat really does remain a very real threat.

This is the rain coming down in the next 48 hours. There's the new storm. This is the disturbance just to the south of Acapulco and then up to the northwest. You can see that system that is Manuel still. So again, when we look at the rain coming down, these are the totals expected, not as heavy as we've seen. But of course any rain at this point, Richard, is not a good scenario at all. So it is still a very serious situation on the ground in Mexico.

QUEST: Jenny Harrison, who's keeping us up to date in the World Weather Center, Jenny, we thank you for that, Jenny Harrison.

Now when we come back, there's a lot to chew over in the course of a busy day. So we'll have a "Profitable Moment."

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QUEST: Tonight's "Profitable Moment": it is a central tenet of central bank life that you do not take markets by surprise. An enormous amount of effort is put into making sure that market participants know what the central banks are thinking. After all, dislocation can create volatility; volatility creates uncertainty; uncertainty creates bad investment decisions. Bad investment decisions lead to recessions, which is why it was all the more surprising that everybody and their brother and dog pretty much thought the Fed was going to start tapering today, and they did not. Ben Bernanke said the decision to do this was a precaution. They wanted to wait to see there was better and more evidence of a sustainable recovery. That may well be true because the truth is central banks are the only bank in town. They're the only game in town. Federal government, other government, they've all absolved responsibility. It's the central bankers that are ensuring the whole thing doesn't come crashing down.

As for me, it's going to cost me money. I've made many bets today that they would taper, and they didn't.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.